Feb 21 (Reuters) - Safeway Inc said Thursday a new
personalized discount program boosted sales in the first quarter
of 2013 compared with the fourth quarter, sending shares up
nearly 14 percent on the New York Stock Exchange.

The second-largest U.S. supermarket chain, which operates
the Safeway, Vons and Dominick's supermarkets, also reported
stronger-than-expected fourth-quarter profit and said it saw no
impact from a recent U.S. payroll-tax hike, which had eaten into
the take-home pay of many shoppers.

Investors had been looking for signs of progress from
Safeway, which has been working to attract customers and boost
sales amid tough competition from traditional grocers such as
Kroger Co and discount retailers ranging from Wal-Mart
Stores Inc to dollar stores.

If trends hold for the remainder of the week, Safeway's
identical-store sales will be up 2 percent for the initial eight
weeks of the first quarter of 2013, Steve Burd, Safeway's
chairman and chief executive, said on a conference call with
analysts.

Safeway's identical-store sales were up 0.8 percent,
excluding fuel, in the fourth quarter.

At Safeway, that closely-watched measure includes results
from established supermarkets that have not been replaced or
significantly renovated.

The company's shares were up 13.5 percent at $22.84 in
afternoon trading on the New York Stock Exchange.
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